In this article, we consider a recent trend whereby private equity available from venture capital firms is being deployed toward mission-driven initiatives in the form of impact investing. Acting as hybrid organizations, these impact investors aim to achieve financial results while also targeting companies and funds to achieve social impact. However, potential mission drift in these VCs, which we define as a decoupling between the investments made and intended aims, might become detrimental to the simultaneous financial and social goals of (...) such firms. Based on a content analysis of mission statements, we assess mission drift and the hybridization level of VC impact investors by examining their missions and their investment practices through the criteria of social and financial logic. After examining eight impact-oriented VC investors and their investments in 164 companies, we find mission drift manifest as a disparity between the means and ends in half of the VC impact investors in our sample. We discuss these findings and make suggestions for further studies. (shrink)

Responsible investing in an unsustainable world -- The influence of responsible investment -- Fiduciary finance law -- Fiduciary law in retail and institutional finance -- Sovereign wealth funds -- The public fiduciary: in nature's trust.

Recently, there has been much talk of impact investing. Around the world, specialized intermediaries have appeared, mainstream financial players and governments have become involved, renowned universities have included impact investing courses in their curriculum, and a myriad of practitioner contributions have been published. Despite all this activity, conceptual clarity remains an issue: The absence of a uniform definition, the interchangeable use of alternative terms and unclear boundaries to related concepts such as socially responsible investment are being criticized. This article aims (...) to contribute to a better understanding of impact investing, which could help foster this specific investment style and guide further academic research. To do so, it investigates a large number of academic and practitioner works, highlighting areas of similarity and inconsistency on three levels: definitional, terminological, and strategic. Our research shows that, on a general level, heterogeneity—especially definitional and strategic—is less pronounced than expected. Yet, our research also reveals critical issues that need to be clarified to advance the field and increase its credibility. First and foremost, this includes the characteristics required of impact investees, notably whether they need to be organizations that prioritize their non-financial mission over the business side. Our results indicate that there may be different schools of thoughts concerning this matter. (shrink)